Private Limited Company
The Private Ltd Company is one of the most preferred business legal forms by growing Indian start- ups. It is governed by the MCA (Ministry of Corporate Affairs) and regulated by the Companies Act, 2013 and the Companies Incorporation Rules, 2014.
Today, Start Up and young entrepreneurs prefer private limited companies over traditional proprietorship and partnership firms due to several benefits of formation of Private Limited Company.
Private Limited Company
Private Limited Company Details
Types of Private Limited Company
Private Limited Companies can be broadly classified into three categories.
- Company Limited by Shares - In these companies, the members' liability is limited to the nominal share amount as mentioned in the Memorandum of Association. The shareholder cannot be held liable or asked to pay more than his/her share capital invested in the company.
- Company Limited by Guarantee - In a private limited company limited by guarantee, the members' liability is limited to the amount of liability each member undertakes in the Memorandum of Association.
- Unlimited Companies - Unlimited corporations are those types of businesses that have no restrictions on their members' liability. Each member's liability extends over the entire amount of the company's debts and liabilities.
Advantages of Private Limited Company
- No minimum capital is required and can be registered with a mere sum of Rs. 10,000 as total Authorized Share capital.
- A Private Limited Company is a separate legal identity in the court of the law, meaning assets and liabilities of the business are not the same as the assets and liabilities of the Directors.
- If the company undergoes financial distress because of whatsoever reasons, the personal assets of members will not be used to pay the debts of the Company as the liability of the person is limited.
- Free & Easy transfer of shares.
- Uninterrupted existence
- 100% Foreign Direct Investment is allowed.
- The particulars of the company are available on a public database. This improves the credibility of the company as it makes it easy to authenticate the details.
Requirements for Registration of a Private Limited Company
- A minimum number of two and a maximum number of 200 members or shareholders are required as per the companies’ act 2013 before registration of the company.
- A minimum number of two directors is required for registering the private limited company.
- Every company has to send 5-6 names for approval to the registrar of the company and all the names should be unique and expressive.
- The Registered office of the company is where the company’s main affairs are been conducted and where all the documents are placed.
- A digital signature is obtained by all the directors which are marked on all the documents by every director.
- Various professionals such as company secretary, chartered accountants, cost accountants, etc are required to make their certification at the time of company incorporation.
Documents Required for Address Proof of Company
- Conveyance/ Lease deed/ Rent Agreement
- NOC from Owner
- Latest Utility Bill of registered Office
Documents Required for Directors / Shareholders
- PAN Card
- Identity Proof ( Voter’s ID / Passport / Driving License )
- Address Proof ( Latest Telephone Bill / Electricity Bill/ Bank Account Statement )